June 13, 2022

5 Key Milestones Necessary for Web3 to Become Mainstream Ready

GM Web3 Academy DOers!

Waking up this morning felt a little like this picture below… 🤣

Another wild day in crypto and web3, but we're still here!

Still learning, building and preparing for Web3 to takeover the world. Because let's not get it twisted, Web3 is about to explode… whether you like it or not!

With the recent struggles in the crypto markets, it’s a great time to reflect on where we are, where we came from and where we’re going next in order for Web3 to go mainstream.

This can help us re-evaluate what we’re doing and get back on track for the future. Let’s dive into some of the numbers across the ecosystem.

If we look at the total market cap of the crypto and web3 industry, it is valued at approximately $1.26 Trillion at the time of writing. Although that may seem like a very large number, it is a tiny fraction compared to other existing asset classes:

  • Gold = $10+ Trillion

  • US Housing Real Estate = $44 Trillion

In fact, today there are 3 public companies (Apple, Microsoft and Alphabet) which are individually valued higher than the entire crypto space!

In the grand scheme of things, crypto and Web3 are still extremely small and nascent.

However, in just the last 2 years, this space looked completely different.

Let's do a quick recap.

P.S. Join our community call today (June 13th) at 7pm EST in Discord for a discussion and review of Lens Protocol (The new Web3 Social graph)! Anyone who joins will receive a whitelist spot in Lens Protocol and be eligible to mint their Lens handle pre public access!

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The state of Web3 in 2020

For perspective, let's take a look at the state of Web3 in the beginning of 2020:

  • The term DeFi didn’t exist and the DeFi ecosystem we know today did not take off until the summer of 2020.

  • NFTs weren’t a thing (except for a few test projects like crypto kitties and cryptopunks… FYI cryptopunks were FREE to mint and trading for dollars back then!)

  • The only people who knew what a DAO was were those actually in one (at that time there weren’t many)

  • Alternative layer 1s were basically non-existent, other than the ghost chains from 2017 (EOS, NEO, etc.). There was no Solana, Avalanche, Terra, Near… not even BSC at that point.

  • Bitcoin was the only somewhat accepted crypto in the traditional world back then. Yet, at that point it still wasn’t accepted in the traditional finance as a valuable asset to hold in any portfolio. 

To paint this picture even further for you, the market cap of the total crypto market on January 1st, 2020 was $189 Billion. Ethereum today has a larger market cap than that on its own and it’s currently sitting at a low for the last year at $240 Billion!

The growth in this industry in just the last 2 years is nothing short of extraordinary. We reached a peak total crypto market cap back in November 2021 at around $2.84 Trillion!

For the first time, the excitement around crypto and web3 actually has some weight behind it. In past years it was always a promise and a hope but today, we’ve created real world value and are reaching adoption/growth numbers that would have been a dream just two years ago.

Even though things seem bad right now, perspective is key. We are lightyears ahead of where we were just 2 years ago.

Key Milestones For Crypto Adoption in the 2020’s:

  • Blockchains like Ethereum are settling multiple trillions of dollars in transactions/year

  • Single applications like Uniswap are reaching cumulative trading volumes over $1 trillion.

  • The number of users interacting with NFTs are skyrocketing into the millions (4 Million+ today, up from next to 0 just 2 years ago) 

  • Web3 games like Axie Infinity are going mainstream in developing countries and onboarding millions (7+ Million web3 gamers in total) into the Web3 Ecosystem.

  • The total developers across the industry has more than doubled since 2020

  • VC investment hit an all-time-high of more than $34 Billion in 2021

  • Fortune 500 countries are holding BTC and ETH on their balance sheets (Microstrategy, Tesla, Square, KPMG, etc.)

  • Countries are buying the dip and making Bitcoin legal tender (El Salvador, Central African Republic and it appears there are more to come)

  • And finally, many of the largest corporations in the world are building on top of Ethereum, experimenting with NFTs to create new experiences and interactions with their community and integrating crypto payments (Visa, Instagram, Twitter, NBA, Budweiser, Adidas, Nike, etc.)

Here is the adoption chart to tell the entire story. This shows total user growth across crypto growing faster than the internet did at its same point of adoption (300million+ users!)

It’s safe to say that crypto and Web3 has already begun its run to go mainstream thus far into the 2020s… however there is a problem.

Web3 is not ready for the mainstream.

The tech is not growing fast enough to support its current rate of adoption (which tells you something about its product market fit!)

The Current State and Problems of Crypto & Web3

  • The UX/UI of this ecosystem is terrible.

  • Web3 Wallets, the main tool required to enter the ecosystem, are not yet ready for mainstream use in terms of UX.

  • Dapps are not ready for mobile, where most internet users are.

  • While we have the solutions figured out to scale blockchains to the masses, the tech is not fully built out and ready for the masses (Currently, Solana continues to go down every month, Terra imploded to 0, Avalanche fees have skyrocketed with user adoption and of course Ethereum L1 fees are way too high).

  • Interoperability between blockchains and applications is not yet ready, seamless or secure.

  • Scammers are everywhere.

  • There is still a lot of unknown risk to the underlying protocols that most users are not aware of.

  • Regulation is still uncertain.

There’s still a lot under the hood that we need to build/fix before we’re ready for the applications that onboard the masses. 

It’s easy enough to understand this fact when we realize that the biggest milestone of crypto and web3 in 2022 will be the Ethereum merge, which is funny because most people won’t even realize or recognize when it happens. 

Most people, even those in the crypto space, still don’t even understand what the implications of the Ethereum merge are. Yet, for those in the know, this is not just one of the biggest events and technological feats of the year, but likely in crypto's entire history!

People are thinking about going to the moon and onboarding billions of users, yet the reality is we’re still just trying to get the underlying protocols to work properly.

For example, Web3 Academy launched a simple POAP NFT to token-gate our Discord Community and what a disaster that was in terms of UX both on our end and the users. Ultimately, the tech works and it accomplished things not possible with Web2, but the UX is simply not there yet.

(…FYI if you want to join our Discord Community simply fill out the application here). 

So the natural next question is… where does Web3 go from here to become mainstream?

The answer is: We keep building. We keep experimenting. We keep learning.

We’re building an entire new digital ecosystem with new applications, new forms of money and equity and new forms of structure and organization.

This shit takes time!

Here’s what’s on my radar for Web3s road to mainstream…

5 Key Milestones Necessary for Web3 to Become Mainstream Ready

1. The ETH Merge

Ethereum has proven to be the only viable layer 1 smart contract platform with sufficient security, decentralization and uptime (100%) to support a new digital ecosystem.

The underlying technology that everything in Web3 sits on and utilizes for its security is extremely important. Getting this foundation right is the most important thing in Web3 right now and Ethereum is on track to do it all.

The merge is a huge step towards upgrading the Ethereum Blockchain for long-term sustainability.

Simply put, here’s the two big upgrades coming from the ETH Merge:

  • Improved Monetary Policy – Post-merge Ethereum becomes the first deflationary asset and profitable blockchain. This tokenomic structure is necessary to ensure a secure and sustainable blockchain long into the future.

  • Environmental Sustainability – With the move from Proof of Work to Proof of Stake, Ethereum relieves itself from using huge mining rigs that need to be replaced every few years and reduces its energy use by 99.9%. If the future is green and sustainable, our settlement layer must be too.

2. Layer 2 Scaling

Ethereum L1 is the secure settlement layer for Web3. However, applications and users will not use the Ethereum L1, it is slow and expensive (…by design).

To scale to billions of users we will use fast and cheap Layer 2s which utilize the security of the Ethereum L1 (…Ethereums solution to scalability was always security first, scalability second). 

Layer 2s flip the scalability trilemma on its head.

Without going into details, you just need to understand that L2s become cheaper with more users and transactions on L2s, the opposite of every L1 blockchain. So the L1+L2 Ethereum combo gives us the security we need and the low cost/speed we need.

L2s are where applications will be built and where the users will live. Layer 2s are already here with Optimism, Aribitrum, Immutable X and many others growing strongly.

The underlying tech is ready, now we wait for more adoption and better UX/UI.

3. Big Tech Entering Web3

The giants of the world are all entering Web3 right now. These are the companies with the most developers, the best UX/UI designers, the most capital and of course BILLIONS of existing users.

As the tech giants begin plugging into the Web3 ecosystem, the users will be onboarded at mass. Many of them in such a way that they don’t even know they are using blockchain, NFTs or what we think of crypto and Web3 today.

This is coming faster than most people realize as we’re already seeing companies like: Twitter, Meta, Google, Reddit, Shopify, Spotify, Robinhood, etc. all already plugging into Ethereum and other blockchains!

P.S: If you're looking for a Web3 Job OR you are a Web3 company hiring, apply to our Web3 Academy Talent Collective. We are curating a group of talented professional and linking them with top job opportunities in Web3! Apply HERE

4. GameFi 

There is no easier product market fit to see than games incorporating Web3 tools like NFTs and token.

There are over 3 billion gamers across the world right now playing for free. What do you think they will do when they can play the same quality of game but instead earn real $$?

GameFi is so obvious. It will onboard billions of users and it will do it very quickly once the games and tech are ready. We are 1-3 years out until these are ready for mainstream gameplay.

5. Regulation

Love it or hate it, regulation of crypto and web3 is coming. With the executive order put out by Biden in early 2022 and the collapse of the $50+ Billion Terra ecosystem recently, expect regulation to hit soon.

While it may be negative at first, it will work itself out just like the internet did. Regulation will allow for monetary and human capital to flow into this space at an unbelievable rate.

Bring it on regulators!

Final Thoughts:

These are the top 5 things I’m watching right now to understand how and when Web3 will reach the masses. When I look at the current state of Web3 I couldn't be more bullish and excited, even though the markets suggest otherwise.The price of the markets do not reflect the fundamentals actually occurring inside the space. Markets follow narratives and trends that may have nothing to do with the reality of the ecosystem itself, and that’s ok! When markets become separated from the fundamental reality it’s simply an opportunity for those in the space to take advantage of.

Web3 is not an if, it is a when. Web3 is inevitable. Those who stay on the forefront of this space will have some of the greatest opportunities available in their lifetime.

I mean this in terms of investment, but also in terms of starting a business, finding a forever job, getting in early to the next phase of the biggest companies in the world and the list goes on and on.

The key here is to stay involved and stay ahead of the trend.

Exciting times ahead for Web3!

Kyle ReidheadFounder of of Web3 Academy & Impact Digital MarketingTwitter

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